Redflow H1 FY20 Results 27 February 2020 Disclaimer This - - PowerPoint PPT Presentation

Redflow

H1 FY20 Results 27 February 2020

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Disclaimer

This presentation has been prepared by Redflow Limited (“Redflow”). It contains general information about Redflow as at the date of this presentation. The information in this presentation should not be considered to be comprehensive or to comprise all of the material which a shareholder or potential investor in Redflow may require in order to determine whether to deal in shares. The information in this presentation is of a general nature

• nly and does not purport to be complete.

This presentation does not take into account the financial situation, investment

• bjectives,

tax situation or particular needs of any person and nothing contained in this presentation constitutes investment, legal, tax or other advice, nor does it contain all the information which would be required in a disclosure document or prospectus prepared in accordance with the requirements

• f

the Corporations Act 2001 (Cth). Readers or recipients of this presentation should, before making any decisions in relation to their investment or potential investment in Redflow, consider the appropriateness of the information having regard to their own objectives and financial situation and seek their own professional legal and taxation advice appropriate to their particular circumstances. This presentation is for information purposes only and does not constitute or form part of any offer, invitation, solicitation or recommendation to acquire, purchase, subscribe for, sell or otherwise dispose of,

• r issue, any shares. Further, this presentation does

not constitute investment advice, nor shall it or any part of it or the fact of its distribution form the basis

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investment decision. Certain statements in this presentation are forward- looking statements. You can identify these statements by the fact that they use words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, “may”, “assume” and words of similar import. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements, including projections, guidance on future earnings and estimates, are provided in this presentation as a general guide only and should not be relied on as an indication or guarantee of future performance. Forward-looking statements are based on current expectations and beliefs and, by their nature, are subject to a number

• f known and unknown risks and uncertainties that

could cause the actual results, performances and achievements to differ materially from any expected future results, performances

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achievements expressed or implied by such forward-looking statements. No representation, warranty

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assurance (express or implied) is given or made by Redflow that the forward-looking statements contained in this presentation are accurate, complete, reliable or adequate or that they will be achieved or prove to be correct. Subject to any continuing obligation under applicable law or relevant listing rules of the ASX, Redflow disclaims any

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undertaking to disseminate any updates or revisions to any forward- looking statements in this presentation to reflect any change in expectations in relation to any forward- looking statements or any change in events, conditions or circumstances on which any such statements are based. Nothing in this presentation shall under any circumstances create an implication that there has been no change in the affairs of Redflow since the date of the presentation. Except for any statutory liability which cannot be excluded, Redflow and its respective officers, employees and advisers expressly disclaim all liability (including negligence) for any direct or indirect loss

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reviewing this presentation, you acknowledge and agree to the terms set out in this disclaimer.

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Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Key Message

We are now at a key inflection point of growth and are actively engaged with global telco and tower operators which represent over 70,000 towers under management and have the requirement and capacity to drive material battery orders for Redflow.

• 1. Company Summary
• 2. Financials
• 3. Operations
• 4. FY20 Key Priorities
• 5. Appendices

Table of contents

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Visit by Australia’s Chief Scientist, Dr Alan Finkel, to Children and Family Centre at Wantirna South, Melbourne, Australia

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Company Overview

Redflow designs and manufactures zinc-bromine flow batteries

Key Geographies South Africa & Southern Africa Australia New Zealand China and Selected Asia Major Target Markets Telco Commercial, Industrial & Utility Remote Area Power Systems High end Residential

Redefining energy storage in our target markets

Headquartered In Brisbane, Australia Company owned manufacturing facility in Thailand

60+ current deployments across multiple countries

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Market for redox flow batteries forecast to be worth US$4.5 billion by 2028*

* Source: IDTechEx Aug 2018

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

1H20 Key Highlights

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• Continued investment in R&D to maintain industry leadership and improve battery performance
• Access to Australian government R&D rebate scheme
• Material progress on key projects and supplier negotiations to deliver 30% cost down target
• Additional innovation developed for telco sector focused on anti theft solutions and easier deployment
• Ongoing investment in patent portfolio
• High profile visit by Australia’s Chief Scientist , Dr Alan Finkel, to Knox City Council deployment

Innovation and Technology Leadership Operations

• Initial 68 battery order delivered for use at Vodacom sites through partner Mobax following extensive Vodacom testing
• Experienced Sales Director hired to promote Redflow and secure new customers in South Africa
• Selected by the Rural Connectivity Group (RCG) in New Zealand to provide batteries for new cell sites in rural locations.

First site delivered. Broader commercial agreement with RCG, expected to be finalised over the coming months

• Worked with TIEC Electrical to install a battery-based energy storage system at a remote station in Western Australia
• Moderated production Redflow Thailand facility to preserve cash. Can rapidly scale to commercial quantities

Financials

• Revenue up 282% on prior corresponding period (pcp) to $1,437k
• Gaining momentum with $316k in follow up orders from strategically important customers
• 127% increase on pcp in cash receipts to $1,390k (1H19: $613k)
• Cash balance of $5.0m as at 31 December 2019, with an R&D tax rebate of $2.0m received post balance date
• Reduced Redflow Australia operating costs by $900k from pcp

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Diesel Reduction Off-Grid

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Customer Value Proposition

Weak-grid Resilience & Productivity Renewable integration On and Off-Grid Power Consumption Reduction On-grid Battery Theft Avoidance Optimised minigrid operations

Targeting markets and applications where our unique battery technology has the strongest customer value proposition

Australia South Africa South Africa New Zealand Thailand Australia

H1 FY20 Financials

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Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Revenue for the period was up 282% on prior corresponding period (pcp) to $1,437k with reported profit/(loss) before income tax of ($3,855k) driven primarily by:

• Higher sales to customers
• Other Income up 12% resulting from an

increased R&D Tax Claim

• Other expenses -17% to $4,701k due to

lower payroll costs.

• Raw materials and consumables used

increased to $2,695k due to higher Cost of Sales a result of higher revenue, the moderation of production volumes resulting in an under recovery of manufacturing

• verheads and the expensing of all freight as

it is incurred

Profit & Loss

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A$’000 H1 FY20 H1 FY19 Revenue 1,436.5 376.1 Other Income 2,104.8 1,878.2 Expenses Raw Materials and Consumables Used 2,694.8 1,484.4 Other Expenses 4,701.4 5,682.1 Profit/ (Loss) before Income Tax (3,854.9) (4,912.2) Income Tax Expense 44.3

• Profit/ (Loss) after Income Tax

(3,899.1) (4,912.2) Other Comprehensive Income 3.8 (18.4) Total Comprehensive Loss Year (3,895.3) (4,930.6)

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Solid net cash position of $5.0 million, with additional $2.0 million R&D tax rebate received January 2020 Other current assets up to $2.3 million reflects the accrual for the R&D tax rebate received in January. Sufficient batteries in inventory to allow for immediate demand ramp up

Balance Sheet

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A$’000 31 Dec 19 30 June 19 Cash and cash equivalents 5,023.1 10,902.5 Trade and other receivables 138.4 61.3 Inventories 7,341.9 7,866.9 Other current assets 2,342.0 316.0 Total current assets 14,845.4 19,146.7 Property plant and equipment 1,004.4 1,089.7 Intangible assets 620.5 606.6 Right of use assets 170.1

• Total non-current assets

1795.0 1696.3 Total Assets 16,640.4 20,843.0 Trade and other payables 494.1 1054.6 Lease liabilities 92.7

• Other current liabilities

440.2 759.4 Provisions 1,582.5 1,313.4 Total current liabilities 2,609.4 3,127.4 Lease liabilities 77.5

• Provisions

152.3 118.1 Total non-current liabilities 229.8 118.1 Total liabilities 2,839.2 3,245.5 NET ASSETS 13,801.1 17,597.5 Contributed equity 119,624.1 119,586.2 Reserves 3,474.9 3,410.0 Accumulated losses (109,297.9) (105,398.7) TOTAL EQUITY 13,801.1 17,597.5

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Net cash (outflows) from operations down 42.4% on pcp to $5.5 million:

• Substantial increase in Receipts from

customers, as a result of higher battery

• rders and deliveries in H1 FY20.
• Payments to suppliers and employees

down 32.4% to $6.9 million, following inventory build in H1 FY19, moderation

• f battery production and lower

headcount in H1 FY20. Net cash (outflows) from investing activities was $235k compared to $425k in pcp reflects lower capital expenditure requirements.

Cash Flow

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A$’000 H1 FY20 H1 FY19 Cashflows from operating activities Receipts from customers 1,390.4 613.1 Payments to suppliers and employees (6,898.4) (10,200.3) Grants R&D tax incentive received 40.0

• Interest received

49.0 125.4 Interest and finance charges paid (4.2) (9.3) Income tax paid (36.4)

• Net cash (outflows) from operating activities

(5,459.6) (9,471.1) Cashflows from investing activities Payment for property plant and equipment (111.0) (351.9) Payments for intangible assets (123.9) (73.3) Net cash (outflows) from investing activities (234.9) (425.2) Cashflows from financing activities Transaction costs from capital raising (66.2)

• Principal elements of lease payments

(93.4)

• Net cash (outflows) from financing activities

(159.6)

• Net increase/(decrease) in cash and cash

equivalents (5,854.1) (9,896.3) Effects of currency translation (25.3) 20.2 Cash and cash equivalents at beginning of half year 10,902.5 17,732.8 Cash and cash equivalents at end of half year 5,023.1 7,856.7

Operations

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Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Main Focus

Major target markets

• >4m cell towers globally
• Power costs a major factor
• Load shedding / weak grids

increase demand for long duration batteries

• Increase in infrastructure sharing

and tower companies

• Battery theft plus commercial and

environmental concerns over diesel use

• Multiple industries where stable and

cost efficient power is critical

• Key issues include intermittent

power, high peak demand tariffs and maximising renewable use

• Address solar curtailment
• Battery Energy Storage System

crucial to RAPS with renewable energy sources and can improve fossil fuel gen. efficiency

• Needs high temperature battery

tolerance, no capacity decline and 100% daily depth of discharge

Energy-focussed applications Frequency cycling Warm climates that rapidly degrade other batteries Our sweet spots include…

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Telco Commercial, Industrial & Utility Remote Area Power Systems (RAPS) Provide technical and commercial value proposition across off-grid, weak-grid and back-up power supply applications Reduce energy costs by replacing / supplementing grid power and avoiding demand tariffs through storing off peak energy Redflow solution is well suited to these and our ten year life offers an attractive commercial proposition

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

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The telecommunications sector presents a large and growing market

• Major growth in markets and geographies with no or weak grid

environments

• Growth expected in areas of poor or limited grid connection and concentrated

in Africa & Asia**

• Base stations energy use are a major cost component for Telcos
• Vodafone Group: 164,000 base stations consumed 3.7GWh in 2019 equating

to 66% of total Group energy consumption***

• Flat average revenue per user leading to focus on reduction in opex while

ensuring network uptime

• Expected increases in power consumption due to 5G
• Growth of tower companies and infrastructure services
• Focus on efficient energy management and journey towards power as a

service models

• Renewable Energy Commitments
• Global telco operators have clear and ambitious renewable energy goals ie.

replace use of diesel

• Government driven and funded initiatives to reduce blackspots in key

countries.

• Government programmes to fund, subsidise or mandate build out of towers in

rural or remote locations

* Mordor Intelligence, Telecom Towers Market, Growth, Trends and Forecast (2019 - 2024) ** GSMA Report, Green Power for Mobile, December 2014 *** Vodafone Group Sustainability Report, 2019

1 million +

• ff-grid and bad-grid towers by 2020

with over 90% using diesel as main power source**

120,000

new base stations are deployed yearly – mostly in countries with poor grid infrastructure**

4 million

telco base stations globally with 4.6% CAGR growth 2019-2024*

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Update on Key Geographies

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• Demonstrated Redflow’s 100 kWh battery system at the Zbest Power Haidong Transport Project site to a wide range of

government and private sector participants

• Some impact on battery sales and supply due to COVID-19 outbreak, however not material

Other Markets - China Australia and New Zealand

• Selected by Rural Connectivity Group (RCG) to provide energy storage solution in off-grid telco sites in remote rural

locations - currently working on a broader commercial agreement with RCG, expected to finalise over the coming months

• Key reference deployments in Australia:
• Delivered 27 battery order to power microgrid installation in North West Tasmania for Simon Hackett
• Partner TIEC Electrical installed an energy storage system at Yallalong Station
• Growing pipeline of sales opportunities for rural solutions in Australia

South Africa and other African Markets

• Ongoing national grid issues, high cost of running diesel generators and endemic battery theft across telcos provide a

significant opportunity for Redflow

• September 2019 – Won order of 68 ZBM2 zinc-bromine flow batteries from its partner Mobax (a leading field service

provider to telco operators across Southern Africa)

• December 2019 – Vodacom, one of Africa’s leading telecommunication companies commences deploying Redflow zinc-

bromine flow batteries to mobile base stations in South Africa.

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Momentum Building Across a Global Sales Pipeline

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Selected Highlights - Updated 24th February 2020 Region Initial Customer Engagement Initial Orders/ Trial Commercial Negotiations Commercial Deployment Telco Mobile Operator (Optus) Australia    Mobile Operator in South Africa (Vodacom) Africa     Telco Infrastructure provider in South Africa (Moropa) Africa     Telco Infrastructure Provider (RCG) NZ     Another Mobile Operator in South Africa* Africa    Another Mobile Operator in Australia* Australia   Mobile Operator in Indonesia Asia   Mobile Operators outside South Africa* Africa  Telco Infrastructure provider in South Africa* Africa   Telco infrastructure and mobile operators other* Asia   Telco Infrastructure providers outside South Africa* Africa   Mobile Operator in Pacific* NZ/Pacific  C&I Small Commercial (Knox City Council) Australia     Remote Power System (RAPs) – Western Australia Australia     Medium Industrial in South Africa* Africa   Medium Commercial - Thailand Asia  RAPs Minigrid in Thailand Asia     Small Scale system – Demo with Zbest in China Asia    Multi-site Small Commercial (RAPs) Asia  Residential Various Residential Australia    

Significant activity in last 12m



Major focus in last 6 months * New in last 6 months



FY20 Key Priorities

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Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Sales and Business Development

• Build blue-chip customer recognition of technical merits
• f Redflow batteries to enable scalability and rollout
• Leverage end customer engagements and strategic

partnerships to drive sales growth and regular orders Strategic opportunities

• Continue to explore and progress strategic partnerships

to drive a step-change in sales over the long-term Research and Development

• Make investments focused on anti-theft solutions and

cost-down programs Financial

• Ensure business capitalised to execute on growth

strategy

Key Priorities for 2H FY20

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Daintree Forest deployment for Optus, Australia Mobile tower deployment for Moropa - Vodacom rural network, South Africa

Appendices

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Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Tim Harris Chief Executive Officer & Managing Director A seasoned business executive, previously Chief Commercial Officer for Chorus, New Zealand’s largest wholesale open access telco operator. Prior senior executive roles with BT, including MD South East Asia

Board of Directors

Brett Johnson Non-Executive Chairman Over 14 years Director experience of listed companies including Scott Corp Ltd and Helloworld Ltd. Over 25 years experience as General Counsel of listed Australian companies, including Qantas Airways. David Knox Non-Executive Director Previous CEO and MD

• f Santos Ltd. from

2008-2015. David was also previously MD for BP Developments in Australasia from 2003 to 2007 and worked for BP in the U.K. and Pakistan. John Lindsay Non-Executive Director Previously held senior technology leadership roles including CTO at iiNet Ltd, CTO at Internode and GM of Chariot Internet. John is a board member of the Australian Telecommunication Industry Ombudsman and is a Non-Executive Director of Uniti Group Ltd. David Brant Non-Executive Director An experienced businessman with strategic manufacturing expertise, is a Fellow of the Australian Institute

• f Company Directors

with more than two decades of manufacturing and corporate experience in Australia and countries in Asia.

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Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

Management Team and Technical Experts

Tim Harris Chief Executive Officer & Managing Director Richard Aird Chief Operating Officer Trudy Walsh Chief Financial Officer

• Dr. Alex Winter

Consulting Engineer

• Dr. Mike Giulianini

Chief Technology Officer Ben Shepherd Chief Commercial Officer Simon Hackett System Integration Architect

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• Dr. Tim McTaggart

Chief Deployment Officer

Company Overview Positioned to redefine energy storage in our target markets

RFX Investor Presentation - February0

ZBM2 Technical Specifications

* 1 Values reported for ZBM2 at 100% state of health (SOH) and room temperature * 2 Redflow internal testing shows a 5kW supply for approximately 45 minutes before disconnection, for a ZBM2 starting at 100% state of charge (SOC) * 3 See full warranty document for details, Terms and Conditions apply ZBM2 Technical Specifications Voltage 48 Volt DC nominal batteries (typical operating range 40- 60V) Capacity Maximum 10kWh energy output per daily cycle No reserved battery capacity requirement – full 10kWh cycle depth available Dimensions 845 L x 823 H x 400 W (mm) 33 L x 32 H x 16 W (in) Weight 240 kg (530 lb) with electrolyte 90 kg (198 lb) without electrolyte Electrolyte volume 100 L (26Gal) Energy efficiency 80% DC-DC Max Internal (electrolyte)

• perating temperature

Operating electrolyte temperature range of 15°C to 50°C (59°F to 122°F), ZBM2 can typically operate at ambient temperatures outside this range for extended periods Communication MODBUS RS485 Safety data sheet DG Class 8 for electrolyte Power rating 3kW (5kW peak) 3kW continuous: current up to 75A (40V disconnection point) *1 5kW duration depending on the State of Charge (SOC): current up to 125A (40V disconnection point) *1, 2 Regulatory compliance marks CE and RCM Warranty 36,500 kWh of energy delivered or 10 years (whichever comes first) *3 No cycle depth limitations – battery performance and lifetime is not sensitive to cycle depth Source: https://redflow.com/products/redlow-zbm2/

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